Government plans to reform Section 21 are likely to be damaging to the housing market.
According to current legislation landlords in the UK can evict tenants under legislation known as Section 21 and Section 8. Currently, section 21 allows a landlord to evict a tenant after a fixed term tenancy ends, given that there is a written contract, and during a “periodic” tenancy, that is a tenancy with no fixed end date. Section 8 allows a landlord to evict a tenant if there has been a breech of contract such as rent arrears.
But government proposals to reform these areas of law have left landlords and tenants in a state of uncertainty.
Ian Bythell, Director at Petty Real, offered the following comment:
“The proposed changes will be bad news for both the supply side and the demand side of the industry. Section 21 enables landlords to take possession of their own rightful property under legitimate circumstances. The effect of restricting section 21 will be to make Landlords more selective about who they let their property to, and this will inevitably impact on the most vulnerable and those on low incomes.”
The Residential Landlord’s Association (RLA) has said the proposals are very likely result in even more cases being referred to the courts which are already so overburdened that disputes can take between 6 and 9 months to resolve. RLA has called for a dedicated housing court, but this seems unlikely to happen in the near future.
Simon Gerrard, Managing Director of Martyn Gerard Estate Agents and President of the National Association of Estate Agents believes the UK is heading for a housing disaster. In an open letter from the industry he writes:
“The Government is imposing repeated and unfair additional costs to the good landlord, not just the bad. The proposal to remove section 21 no-fault evictions might be the straw that breaks the camel’s back. With such limited return and enormous financial risk, who would invest in a buy-to-let property?”